The recently passed appropriations bill includes the long-awaited SECURE (Setting Every Community Up for Retirement Enhancement) Act and other retirement-related rules. This act went into law on January 1, 2020. This is the most significant change in retirement plan rules since 2006.
Here is a summary of the major components:
- The minimum distribution age increased from 70 ½ to 72
- No more stretch IRAs, beneficiaries must withdraw all assets of an inherited account within 10 years
- Ease of burden for multiple employer plans
- Employer plans would also be able to enroll long-term part-time workers. Rather than 1,000 hours every year to be eligible, eligibility changed to 1,000 hours per year or three consecutive years of at least 500 hours
- Auto-enrollment encouragement – a tax credit up to $500 will be available to employers who automatically enroll workers into their retirement plans
- Offers more options for lifetime income strategies, such as annuities within retirement plans
- Qualified birth or adoption distribution of up to $5,000 from a defined contribution plan will be allowed without paying the 10% penalty
- 529 funds can now be used to pay down student loan debt, up to $10,000
- A 529 plan may also be used to pay for certain apprenticeship programs
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